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Patrick McKeough is one of Canada’s top safe-money advisors. The Wall Street Journal, Forbes and The Hulbert Financial Digest have all recognized his ability to find stocks with hidden value. He is editor and publisher of The Successful Investor, Stock Pickers Digest, Wall Street Stock Forecaster and Canadian Wealth Advisor; inventor of the Quick Profit/Value System and the ValuVesting System™. A best-selling Canadian author, he wrote Riding the Bull, the book that predicted the 1990s stock-market boom.

Investor Toolkit: 2 ways you could miss out on record gold investing profits

August 24, 2011 -  Be the first to comment
Posted by: Pat McKeough Filed in: Gold Stocks
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Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a beginning or experienced investor, these weekly updates are designed to give you specific investment advice, including the best ways to profit in gold investing. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away.

Today’s tip: “2 ways you could miss out on record gold investing profits”

On Monday, gold closed at a new record high of $1,898.10 U.S. an ounce. Prices have since pulled back to around $1,861.30 U.S., but that’s still up 52.3% from $1,222.00 U.S. a year ago.

We think gold could well move higher in the long term, although it will continue to be volatile. (You can get our latest outlook on gold prices, as well as 7 strategies for lower-risk gold investing, in our FREE report, Gold Investing: 7 Profitable Strategies for Investing in Canadian Gold Stocks.)

Gold’s recent gains have mainly resulted from investor concerns about high sovereign debt levels in the U.S. and Europe. Investors are also concerned about the weakening global economic recovery and recent stock market volatility.

These fears are prompting more investors to buy gold and gold investments, because they believe gold investing will provide them with additional security.

Get one of Pat McKeough’s top gold stock picks FREE. You'll learn all about this exciting company in Pat's special report, "Gold Investing: 7 Profitable Strategies for Investing in Canadian Gold Stocks." This established gold miner’s highly productive mines put it in a good position to post strong gains in the years ahead. Click here to download yours today.

Here are two profit-killing strategies you must avoid when gold investing:

  1. Gold futures: Rising gold prices can make trading gold futures look more attractive. However, you can only profit in future-linked deals by out-guessing other futures traders by a wide enough margin to cover commissions and other trading costs. When you dabble in commodity futures, you are betting against professionals who make a full-time occupation of studying these markets, who have better access to information than you do, and pay much lower commissions.

    Most futures traders start out with a planned limit on how much they are willing to lose before they quit. In six months or so, most lose that amount, and quit trading. Because futures traders tend to trade often, a surprisingly large number find that the total brokerage commissions they pay during their trading career is close to the total losses on their commodity investments.
  2. Structured investments: Brokers sell various structured products for investing in gold and other commodities, while supposedly limiting risk. Most participants will ultimately lose money in these investments, as well. Or they will make a poor return in relation to their risk.

    The difference between gold investing in structured products and futures trades is that the losses won’t happen so quickly. In addition, more of the money you lose will flow into brokers’ fees and commissions, while you’ll typically lose less on the commodity investments themselves.

You can learn all about our 7 most profitable strategies for lower risk gold investing—as well as more gold investing pitfalls that you must avoid—absolutely free when you download our special report, Gold Investing: 7 Profitable Strategies for Investing in Canadian Gold Stocks.

If you haven’t yet read this free report, click here to download your copy today. I’d also encourage you to share the report with a friend by forwarding this email to them. It’s my “thank you” just for signing up for my free daily updates.

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